Hanfeng Evergreen Inc.

Hanfeng Evergreen Inc.

March 06, 2008 17:00 ET

Hanfeng Expands Its Distribution Network in China

TORONTO, ONTARIO--(Marketwire - March 6, 2008) - Hanfeng Evergreen Inc. ("Hanfeng" or the "Company") (TSX:HF), today announced its plan to expand its product distribution and fertilizer blending capabilities in China. Since establishing the first commercial scale slow and controlled release fertilizer production in China, demand for Hanfeng's products has outpaced output from the Company's rapidly growing production base. With the establishment of the National Standard for SCU and SCU blended products, using Hanfeng's SCU as the model, and the increased demand generated by more than three years of field trials with large-scale state-owned farms and provincial Academies of Agricultural Science in more than 20 provinces of China, Hanfeng proposes to further its exceptional track record of growth by expanding its downstream capabilities.

Under its distribution model, Hanfeng will select qualified regional distributors from its network using a selection criteria based on location, scale, government affiliation, technical capability, and ownership. The qualified distributors will be converted into Hanfeng's exclusive shops and managed directly by Hanfeng's regional managers. The Company has selected five initial regions for the distribution expansion: Harbin, Heilongjiang Province; Beijing; Xi'an, Shaanxi Province; Weifang, Shandong Province, and Huizhou, Guangdong Province. Hanfeng expects to begin to roll out of its distribution network in 2008 and the third party blending model in 2009.

To support the product inventory requirements, Hanfeng will provide the core slow-release material, contract qualified conventional fertilizer producers around the target regions to provide other auxiliary materials, and designate qualified manufacturers to blend the materials under Hanfeng's brand and its supervision. The finished products will be delivered directly to the Hanfeng Sales Centre and to the area distributors. The localized production structure enables Hanfeng to adjust product types and distribution focus according to the market demand in a timely manner as well as save significantly on production and shipping costs. In addition, by leveraging others production ability, Hanfeng has further reduced its investment risk while accelerating its market share expansion.

"Previously, we have focused on the core slow release fertilizer production, however due to restricted supply as we continue to ramp up production, we have been forced to limit sales to immediate regions surrounding our facilities," stated Hanfeng President and CEO, Mr. Yu Xinduo. "With the expansion into distribution, we have the opportunity to rapidly increase our sales tonnage and market share by leveraging the blending of our products with production from local producers. On average we can blend roughly 10 to 30 percent of coated slow release fertilizers with conventional fertilizer to provide the best economic return for farmers. This means our current capacity of 250,000 tonnes of coating products can potentially turn into 1 million tonnes of end products, which we will sell through our own network."

The Company expects to begin the roll out of its distribution network beginning in 2008. Hanfeng will fund the required additional working capital though a combination of internally generated cash flow and bank debt.

"By expanding our product distribution and fertilizer blending capabilities, we not only increase our sales and net income, but also significantly enhance our exposure to both our end-users and potential joint venture partners. We see this as the logical first step in our next phase of growth as establishing a distribution will create demand from a broader customer base and drive our long term production expansion plans," concluded Mr. Yu.

About Hanfeng Evergreen Inc.

Hanfeng is the largest producer of slow and controlled release fertilizers in China. It was the first company to introduce the concept of slow and controlled release fertilizers into China's agriculture market with its establishment of the first commercial scale production in China. All production facilities are located in prime agricultural regions of China. The Company is headquartered in Toronto, Ontario and its shares trade on the Toronto Stock Exchange. www.hanfengevergreen.com.

This press release contains forward-looking statements based on current expectations. These forward-looking statements entail various risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Risks and uncertainties about Hanfeng's business are more fully discussed in the Company's disclosure materials, including its annual information form and MD&A, filed with the securities regulatory authorities in Canada. All amounts are stated in Canadian dollars except for noted otherwise.

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